Correlation Between Great Taipei and Ruentex Development
Can any of the company-specific risk be diversified away by investing in both Great Taipei and Ruentex Development at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Great Taipei and Ruentex Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Taipei Gas and Ruentex Development Co, you can compare the effects of market volatilities on Great Taipei and Ruentex Development and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Great Taipei with a short position of Ruentex Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Taipei and Ruentex Development.
Diversification Opportunities for Great Taipei and Ruentex Development
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Great and Ruentex is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Great Taipei Gas and Ruentex Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Development and Great Taipei is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Great Taipei Gas are associated (or correlated) with Ruentex Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruentex Development has no effect on the direction of Great Taipei i.e., Great Taipei and Ruentex Development go up and down completely randomly.
Pair Corralation between Great Taipei and Ruentex Development
Assuming the 90 days trading horizon Great Taipei Gas is expected to generate 0.31 times more return on investment than Ruentex Development. However, Great Taipei Gas is 3.27 times less risky than Ruentex Development. It trades about 0.1 of its potential returns per unit of risk. Ruentex Development Co is currently generating about -0.09 per unit of risk. If you would invest 3,025 in Great Taipei Gas on December 2, 2024 and sell it today you would earn a total of 60.00 from holding Great Taipei Gas or generate 1.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Great Taipei Gas vs. Ruentex Development Co
Performance |
Timeline |
Great Taipei Gas |
Ruentex Development |
Great Taipei and Ruentex Development Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Great Taipei and Ruentex Development
The main advantage of trading using opposite Great Taipei and Ruentex Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Taipei position performs unexpectedly, Ruentex Development can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ruentex Development will offset losses from the drop in Ruentex Development's long position.Great Taipei vs. Taiwan Secom Co | Great Taipei vs. Taiwan Shin Kong | Great Taipei vs. Taiwan Cogeneration Corp | Great Taipei vs. Shin Shin Natural |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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